PRISM Analysis: Why is Southwestern on the Move Today?
Southwestern Energy Company (NYSE: SWN) is topping the PRISM Emerging Energy Index with more than 20 million shares changing hands by midday on Tuesday. According to a report in the Wall Street Journal this week, Chesapeake Energy Corporation (Nasdaq: CHK) and Southwestern are reportedly close to finalizing a merger that could reshape the national natural gas industry.
The merger would create an entity valued at $17 billion,surpassing the size and reach of EQT Corporation (NYSE: EQT) to become the largest exploration and production company in the United States, focused on natural gas, based on market value.
Analysts say a potential Chesapeake-Southwestern merger represents a strategic realignment in the US natural gas industry that could set a precedent for future consolidations in the sector, potentially leading to a more streamlined, efficient and competitive landscape.
Southwestern had a strong 2023, reporting positive third quarter results in November 2023, with $45 million in net income, $106 million in adjusted net income (non-GAAP), $513 million in adjusted EBITDA (non-GAAP), $477 million in net cash provided by operating activities and $23 million in free cash flow (non-GAAP).
Southwestern also stated it had invested $454 million of capital and placed 23 wells to sales, including 15 in Appalachia and 8 in Haynesville. The company’s total net production for the quarter ended September 30, 2023 was 425 Bcfe, of which 86% was natural gas, 12% NGLs and 2% oil.
Bill Way, Southwestern Energy President and Chief Executive Officer, commented on the results, saying, “During the third quarter, the Company continued its disciplined approach of optimizing free cash flow generation and activity. This approach balances our dual priorities of debt reduction and managing the productive capacity of the Company in the structurally improving natural gas environment. As we look ahead to next year, Southwestern Energy is well positioned with its deep inventory, firm transportation portfolio and market access to benefit from the expected growing demand from LNG facilities along the Gulf Coast.”
Southwestern’s market cap stands at $7.66 billion.
About Southwestern Energy
Southwestern Energy Company (NYSE: SWN) is a leading U.S. producer and marketer of natural gas and natural gas liquids focused on responsibly developing large-scale energy assets in the nation’s most prolific shale gas basins. SWN’s returns-driven strategy strives to create sustainable value for its stakeholders by leveraging its scale, financial strength and operational execution. For additional information, please visit www.swn.com and www.swncrreport.com.
